Google PESTEL/PESTLE Analysis & Recommendations

Google’s homepage accessed through an iPad. Google’s PESTEL/PESTLE analysis shows that the company must focus on the economic and technological external factors in the remote or macro-environment. The PESTEL/PESTLE analysis model’s other external factors (political, sociocultural, ecological and legal) are less significant in affecting Google. (Photo: Public Domain)

Google’s PESTEL/PESTLE analysis provides insights on the most significant external factors in the company’s remote or macro-environment. These external factors serve as opportunities or threats. Thus, in using the PESTEL/PESTLE model, this analysis of Google yields information on the opportunities and threats most important in the company’s strategy formulation. To keep its position as one of the world’s most valuable company, Google must address the biggest threat in its remote/macro-environment. Effectively doing so can boost the company’s performance. Competitors can also exploit the same opportunities identified in this PESTEL/PESTLE analysis. Thus, the company must take action to use these opportunities for its competitive advantage. This PESTEL/PESTLE analysis also helps investors understand the value of Google and the firm’s position in the remote business environment.

The external factors in the remote/macro-environment of Google determine the firm’s opportunities and the threats to its business. Based on this PESTEL/PESTLE analysis, Google needs to focus its efforts on the economic and technological external factors.

Political Factors

The political external factors influencing Google involve the activities of governments. In the PESTEL/PESTLE analysis model, political factors partly determine the effect that governments have on businesses. The following political factors are significant in Google’s remote/macro-environment:

Globalization (opportunity)

Stable political climate in most of the major markets (opportunity)

State-sponsored online companies (threat)

The political factors in Google’s external environment are mainly opportunities. Globalization increases the demand for online advertising. The stable political climate in major markets minimizes obstacles to the firm’s expansion. However, state-sponsored online companies pose a threat against Google, as in the case of the Chinese government’s control of large firms in China.

Economic Factors

Google’s business is subject to economic changes. In the PESTEL/PESTLE analysis model, economic external factors can change the market opportunities available to businesses. In Google’s case, the following economic external factors are the most significant:

Economic stability of most major markets (opportunity)

Rapid growth of developing countries (opportunity)

These economic external factors present opportunities for Google. The economic stability of major markets and rapid growth of developing countries create new momentum that Google can exploit. The company can use these opportunities for global expansion.

Social/Sociocultural Factors

Social or sociocultural external factors affect the way customers respond to Google’s products. The PESTEL/PESTLE analysis model shows that these factors can present threats and barriers to business. The following social/sociocultural external factors are the most significant in Google’s remote/macro environment:

Increasing use of social media (threat)

Rising diversity of users (opportunity)

The rise of social media usage is a threat to Google because it strengthens companies like Facebook, which also offers online advertising services. The increasing diversity of users is an opportunity for Google to improve its services to match individual preferences.

Technological Factors

The technological nature of Google’s business means that technological external factors have a major impact on the firm. The PESTEL/PESTLE analysis model considers technological changes as potential makers or breakers of business. The following are the technological external factors significant in Google’s remote/macro environment:

Growing Internet access in developing countries (opportunity)

Rapid adoption of mobile devices in the global market (opportunity)

Google faces significant opportunities based on these technological external factors. The company can expect higher advertising revenues as developing markets become more connected online. Also, Google can improve the mobile-friendliness of its online products to exploit the mobile trend.

Ecological/Environmental Factors

Even though Google generates most of its revenues online, the firm is subject to ecological or environmental external factors. In the PESTEL/PESTLE analysis model, ecological/environmental trends influence business strategic direction. The following are the ecological external factors significant in Google’s remote/macro environment:

Global spread of environmentalism (opportunity)

Growing interest in sustainable business (opportunity)

Google has opportunities to address these ecological/environmental external factors. The main idea is to improve the firm’s ecological/environmental impact. In this way, Google can expect improved customer responses based on positive perceptions of the firm’s ecological/environmental contributions.

Legal Factors

Google must operate within legal limits. In the PESTEL/PESTLE analysis model, legal requirements influence what firms can do. The following are the significant legal external factors in Google’s remote/macro environment:

More regulations on online privacy (opportunity)

More regulations on intellectual property rights (opportunity)

Google can exploit the opportunities based on these legal external factors. For example, the company can improve its privacy measures to protect individual users. Also, Google can develop innovative measures to discourage people from violating intellectual property rights.

Recommendations based on Google’s PESTEL/PESTLE Analysis

Google’s PESTEL/PESTLE analysis shows that most of the external factors in the firm’s remote/macro-environment are opportunities. The company must focus on exploiting these opportunities to maintain the company’s competitive advantage. For example, Google can use its culture of innovation to develop capabilities, such as improved responsiveness of Google products on mobile devices. In effectively addressing the opportunities identified in this PESTEL/PESTLE analysis, Google can expect stronger competitiveness and influence in the industry.

References

Goldfarb, A. (2014). What is different about online advertising? Review of Industrial Organization, 44(2), 115-129.

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